Thailand's central bank insisted on maintaining the 30 percent reserve measure to control capital inflow, Thai News Agency reported Tuesday.
Bank of Thailand (BOT) Governor Tarisa Watanagase on Monday denied reports that the central bank planned to give up the measure announced on December 18 last year to stem the baht speculation within 3-6 months.

However, she said the central bank would like to adjust or scrap any previous measures if they cause inconveniences to business performance and have not shown any impacts on the baht appreciation.

Previous measures aimed at stemming baht speculation imposed on November 7, 2006 include seeking cooperation from financial institutions to stop issuing or offering baht-denominated bills of exchange for sale to none-residents, and allowing financial institutions to do foreign exchange-linked derivative transactions with non-residents on a case-by-case basis.

The private sector has complained that the capital control measure fueled costs of issuing debentures and other debt instruments.

Tarisa explained that the baht had strengthened considerably mainly due to speculation. The bank would give priority to solving problems it considered most urgently first.

The BOT had eased the measure by exempting stock investment from the compulsory 30 percent reserve requirement on short-term foreign currencies inflows after the stock market slumped the day the measure took effect on Dec. 19.

Actually, she said, foreign investors, who made investment in the stock market last year, got a 5 percent return from the capital gain plus another 17 percent yield from the currency rate gain.

They lost only 1.5 percent if their capital flew into the stock market for investment of no less than one year when the 30 percent reserve requirement was imposed, she said.